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Exploring Medicare Advantage Plans

Medicare Advantage (MA) is a health insurance program of private plans that substitute for Original Medicare (Parts A and B) benefits. MA includes health maintenance organizations (HMOs) and preferred provider organizations (PPOs).

Medicare Part A covers in-patient hospital service expenses, except for physicians and surgeons. Part B covers costs of physicians and surgeons, medically necessary outpatient hospital services, like laboratory tests, X-rays and diagnostic procedures and certain durable medical equipment and supplies. The Centers for Medicare and Medicaid Services (CMS) processes original Medicare claims. Commercial insurers and private HMO and PPO corporations offer Medicare Advantage. They receive compensation from the federal government, but do not process claims through the CMS.

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Medicare Advantage originated when the Balanced Budget Act of 1997 offered Medicare beneficiaries this option for receipt of benefits through original Medicare Parts A and B. At first, these options appeared as Medicare+Choice or Part C plans. Later, they became Medicare Advantage plans, under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

Medicare has a standard benefit package that covers medically necessary healthcare services. People who reach age 65 qualify for Medicare coverage if they have earned enough credits by paying into the system through payroll deductions. Those fully qualified receive Medicare Part A benefits, without a monthly premium. Those who haven’t qualified pay a premium for Part A. All Medicare beneficiaries who enroll for Part B benefits pay monthly premiums.

For those who subscribe to Medicare Advantage plans, Medicare pays the private health insurance plans a set amount every month for each subscriber. Subscribers may have to pay monthly premiums, in addition to Medicare Part B premiums. But some companies offer MA plans with no premium, in addition to the Medicare Part B premium paid directly to Medicare.

Medicare Advantage subscribers generally pay a fixed copayment every time they see a physician. This is different than Original Medicare, where subscribers meet a deductible and pay coinsurance. Medicare Advantage plans must offer a benefit package at least equal to Medicare coverage. However, they need not cover every benefit in the same way. Plans that require higher patient costs than Medicare for some benefits can offset them, by offering lower costs for others. Private plans may use some excess payments from Medicare for each subscriber to offer supplemental benefits.

In sum, healthcare insurers contract with Medicare to provide all Part A (hospitalization) and Part B (medical and surgical) benefits by Medicare Advantage plan. This includes health maintenance organizations (HMOs), preferred provider organizations (PPOs), Private-Fee-for-Service (PFFS) plans, Special Needs Plans (SNPs) and Medicare Medical Savings Account (MSA) plans. Medicare Advantage plans, not Original Medicare, cover the expenses of Medicare services. Most Medicare Advantage plans cover prescription drug expenses, as well.

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In most HMO plans, the subscriber can go to only doctors, other healthcare providers or hospitals within the HMO network, except in emergency situations. The subscriber may need a referral from a primary care physician to consult a specialist. In some plans, the subscriber may go outside the HMO network for certain services; usually, there are extra costs in HMOs with point-of-service (POS) options. HMO plans cover prescription drugs, in most cases. For Medicare Part D prescription drug coverage, the subscriber must join an HMO that offers it.

In most HMOs, the subscriber must designate a primary care physician to make referrals to specialists. Certain services, however, like annual mammogram screenings, do not require referrals. If the primary care physician or other healthcare provider leaves the HMO, the subscriber can choose another doctor in the network. It’s important that you follow HMO rules, like prior approval for services, when necessary. A subscriber who receives health care outside the HMO network without prior approval may have to pay the full cost.

In Medicare Advantage PPOs, the subscriber pays less to use in-network physicians, hospitals and other healthcare providers than outside providers. So, PPOs offer flexibility in that way, but usually at extra cost. Not all PPOs cover prescription drugs, so for Medicare Part D drug coverage, the subscriber must join a PPO that offers it.

Designation of a primary care physician is not necessary in PPO plans. And in most cases, a referral is not necessary to see a specialist. Costs to use PPO specialists, however, are usually lower than for outsiders. PPOs usually offer more benefits than Original Medicare, but there may be extra costs for them.

PFFS plans determine how much it will pay physicians, other healthcare providers and hospitals for each event. These plans also determine how much the subscriber must pay for care received. In some cases, PFFS plans cover healthcare services from any provider or hospital. Essentially, the subscriber can go to any Medicare-approved provider or hospital that accepts the PFFS payment terms.

However, not all providers accept these payment terms. In PFFS plans with networks, the subscriber can see any network providers who agree to treat plan members at all times. The subscriber also may choose out-of- network providers willing to accept the PFFS terms, but they may pay more than customary. Some PFFS plans cover prescription drugs. If not, the subscriber may join a Medicare prescription drug plan for coverage.

PFFS plans require neither designations of primary care physicians nor referrals to specialists. Some PFFS plans contract with network providers, who agree to treat plan member subscribers never seen before. Out-of-network providers may decide not to treat even patients they have seen before. For all services, the subscriber should make sure providers agree to and accept the PFFS payment terms. Providers must treat subscribers in emergencies.

Providers can choose at any visit or event whether to accept PFFS payment terms and conditions. Original Medicare will not cover healthcare for PFFS member patients; they must first return to Original Medicare coverage. The subscriber pays the copayment or coinsurance amount allowed by the plan for services.

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Less common types of Medicare Advantage plans are available in some areas. HMO point of service plans are HMOs that may allow some out-of-networks services at extra costs. Medicare MSA plans that combine a high deductible with a bank account have two parts:

  1. The first is a special type of high-deductible Medicare Advantage plan that begins to cover healthcare costs after the subscriber meets a high annual deductible, which varies by plan.
  2. The second is a special type of savings account. The Medicare MSA plan deposits money into an account that the subscriber can choose to use to pay healthcare costs before meeting the deductible.

All MA plans must cover Medicare services. But some plans may offer extra benefits not included in Medicare, like dental, vision or long-term care, at extra costs. Medicare MSA plans don’t cover Medicare Part D prescription drug costs. Patients who join Medicare MSA plans and need drug coverage have to join a separate Medicare Prescription Drug plan.

Feel free to check out this website, HealthNetwork.com, for a variety of Medicare Advantage plans. Here, you can explore and select a plan that meets your financial and healthcare needs.


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